A revocable living trust can play a significant role in an estate plan, offering flexibility and control over assets during a person’s lifetime and after their death.
Understanding its advantages and limitations helps determine if it aligns with your estate planning goals.
Avoiding probate
One significant benefit of a revocable living trust is bypassing probate. Probate can be time-consuming and public, which may delay the distribution of assets. A properly funded trust ensures that assets transfer directly to beneficiaries without court involvement, saving time and preserving privacy.
Maintaining control during your lifetime
With a revocable living trust, the grantor retains control of the assets placed in the trust. The grantor can modify or revoke the trust at any time, making it a flexible tool for changing circumstances. This control allows adjustments to the trust if financial or family situations evolve.
Potential drawbacks of a trust
While revocable living trusts offer advantages, they also come with drawbacks. Setting up a trust involves upfront costs and ongoing management. The grantor must transfer assets into the trust to ensure its effectiveness, which requires time and attention to detail. Additionally, unlike irrevocable trusts, revocable living trusts do not offer protection from creditors.
Tax implications in Ohio
In Ohio, revocable living trusts do not provide tax advantages during the grantor’s lifetime. Income generated by trust assets remains taxable to the grantor. After death, the assets in the trust are still subject to estate taxes if the estate exceeds federal exemption limits.
Weighing the pros and cons
A revocable living trust offers flexibility and privacy, making it a valuable tool for many Ohio estate plans. However, understanding its limitations is essential. Carefully considering your financial situation and estate planning goals will help determine whether this option is the right choice for you.
